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Hseng Zou

 
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  • Guide Exploration (Galleon Energy): The Next Daylight Energy? [View article]
    Merger was positive in my view - thesis has not changed but now with a higher market cap / bigger entity (GO + WFE) it's more attractive to prospective buyers. The merger eventually will make the combined company more visible to potential buyers. Great, experienced management with proper incentives + great operational execution so far + Sprott Resources involvement which means more access to prospective buyers and more incentive to realize shareholder value since Sprott Resources are not passive and are incentivized to realize as much value in as little time as possible.

    Investment horizon is longer after the merger, and in the short term I expect the stock price to be depressed and will follow the commodity prices movement absent major news. Will write something on this merger soon.
    Aug 31 02:29 AM | Likes Like |Link to Comment
  • Guide Exploration: Solid Execution, Bright Future [View article]
    Gas price affects the NAV calculations for Guide because it measures how much Guide's "goods" are worth. However, it does not affect the level of gas reserves in the sense that a higher gas price does not make the level of existing gas reserves magically higher. Higher reserves must be developed. Of course, higher gas price gives Guide more of an incentive to develop more gas reserves.
    Aug 2 11:21 PM | 1 Like Like |Link to Comment
  • Guide Exploration: Solid Execution, Bright Future [View article]
    NAV valuation for oil/gas explorations companies (those that specifically focus on upstream activities) is the primary valuation method for those companies. NAV model assumes no increase in additional reserves in the future - it values the company on the basis that the company only develops what it currently has in its reserves. It runs at the asset level - adding up the value of each asset of the company. So the level of current reserves and the price of crude oil / natural gas both play important roles in deriving the NAV value.

    Regarding financing, bank financing is the major source of financing for small/intermediate oil and gas explorations and production companies like Guide. Remember Guide can always cut back on its expansion capex if either natural gas or oil price stays low for a long time, which in my view is highly unlikely. And also remember half of Guide's natural gas production is hedged at about $5 this year (Year 2012).
    Aug 1 09:31 AM | 1 Like Like |Link to Comment
  • Guide Exploration: Solid Execution, Bright Future [View article]
    The significant adjustment of reserves was the result of the change of management in August 2011, and the new management using a new company to measure reserves. Basically the previous management was too aggressive in booking reserves. This has nothing to do with the price of oil/natural gas.
    Aug 1 09:05 AM | 1 Like Like |Link to Comment
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